The main objective of providing depreciation is to ______________.

Reduce tax burden

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Provide funds for replacement of fixed asset

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Show true financial position in the balance sheet

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Comply with legal requirements

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B Provide funds for replacement of fixed asset
The main objective of providing depreciation is to Create funds for replacement of fixed assets. The main objective of charging depreciation is to accumulate adequate fund to replace old asset with the new one after the useful life.

Suggest Corrections

Similar questions

Q. State whether the following Statements are True or False

1. There is need to provide depreciation if it is maintained with care.
2. Depreciation cannot be provided in case of loss in a financial year.
3. A Specific reserve can be created for any purpose.
4. Capital Reserves are not freely distributed as profits.
5. Under the written down value method depreciation is calculated on the original cost of an asset.
6. Depreciation is the process of valuation of asset.
7. Depreciation is a non-cash expense.
8. Secret reserves are disclosed in Balance Sheet.
9. General reserves is created to meet contingency liability.
10. Depreciation is charged only on fixed asset.

Q. A diminishing balance method of providing for depreciation is one according to which ______________.

Q. ___________ is generally conducted to ascertain whether the Balance Sheet and Profit & Loss A/c presents a true and fair view of the financial position.

A fixed asset was bought for Rs. 5,000. Its accumulated depreciation is Rs. 3,000 and rate of depreciation is 20%. Calculate its depreciation expenses for the current accounting period using reducing balance method?

The balance sheet summarizes the financial position of a company for one _________

Join BYJU'S Learning Program